Trade creation and diversion: effects of EU enlargement on agricultural and food products and selected Asian countries

Abstract

Based on estimation of the gravity equation, this article aims to scrutinise the trade effects emanating from the economic integration of the European Union (EU) by focusing on the trade diversion and trade creation effects of the fifth EU enlargement on 12 groups of agricultural and food products. This paper analyses the changes due to the EU’s enlargement of trade patterns in the agricultural and food sectors among the EU member states and between EU and non-EU countries as well as the effects of the enlargement on exports of agricultural and food products from selected Asian countries to the EU market. Our analysis shows no decline in exports from EU to non-EU countries. Trade creation effects are significantly high for 4 product groups: seafood, woody plants, beverages and tobacco, and animal and vegetable materials. However, trade diversion effects are found in animal and vegetable oils and textile fibres. Moreover, the economic integration has had no significant effect on exports from Asian countries, namely agricultural and food products. The data of 38 countries cover the period 1999–2015.